As the new year approaches, many folks will be making resolutions: Exercise more, learn how to cook, make and stick to a budget.
Forgive me, but I will recommend another to your list: Buy DraftKings (DKNG 1.22%) and fuboTV (FUBO +0.00%) stocks. Let me make a case for why these two explosive growth stocks could make excellent additions to your portfolio.
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fuboTV
fuboTV is a sports-centric streaming alternative to traditional cable TV. For folks who prefer the bundled channels offered by a cable subscription with the convenience of streaming their content anywhere, fuboTV is an excellent choice. The company is rapidly expanding its customers and revenue simultaneously.
In its most recent quarter, the third quarter ended Sept. 30, fuboTV reported having 945,000 subscribers. That's 108% higher than it had at the same time last year. Consumers increasingly prefer a streaming bundle versus cable. The former can be viewed anywhere you can get an internet connection on a mobile device, while the latter can only be watched at home.
Unsurprisingly, subscriber growth is leading to an increase in revenue. In Q3, fuboTV reported overall revenue of $156.7 million, which was 156% higher than in the same quarter in the previous year.
The stock is down 32% in the last month and 40% in the year. fuboTV is indeed growing revenue and subscribers at an explosive rate, but expenses are increasing as well. The aggressive expansion may have concerned some investors, and the stock price has collapsed. That could be an opportunity for long-term investors to scoop up shares of fuboTV, which is now trading at a price-to-sales ratio of 4, near its lows of the year.
DraftKings
DraftKings also continues to report explosive revenue growth. The daily fantasy sports, mobile sportsbook, and iGaming company is gaining momentum as more states are legalizing gaming activities.
Revenue increased by 18% in 2018, 43% in 2019, and 90% in 2020. Management is forecasting sales to increase by 96% in the current 2021 fiscal year. What's more, DraftKings recently got approval to operate a mobile sportsbook in the potentially lucrative New York market. Estimates suggest the state could generate gross gambling revenue of $1 billion annually.
Like fuboTV, DraftKings is spending aggressively to grow the business. DraftKings spent 143% on sales and marketing in the most recent quarter. The losses on the bottom line are the primary reason the stock is down 40% year to date in 2021. That's presenting an excellent opportunity for investors to buy DraftKings stock at its lowest forward price-to-sales ratio all year of 8.9.
In order to expand, both fuboTV and DraftKings are spending heavily, and that has some investors concerned. Thankfully, this has presented an opportunity to buy shares in these growth stocks at the lowest prices of the year.
